Credit & Debt

What Is Credit?

Credit is borrowed money or access to borrowed money that you agree to repay under specific terms.

4 min

Credit 101 • 01

Credit lets you use money now and repay it later.

The lender provides money or purchasing power, and you agree to repay according to the agreement.

Borrowing creates an obligation.

The amount you borrow becomes debt until it is repaid.

Common forms of credit include

01Credit cards02Personal loans03Lines of credit04Mortgages05Car loans

Credit and cash are not the same.

01

Cash

Money you already own and can spend.

02

Credit

Money you borrow and must repay.

Borrowing changes both today and tomorrow.

Purchase$1,000
Cash paid today$0
Debt created$1,000
PlusPossible interest and fees

Access to credit is not the same as being able to afford the debt.

A lender may approve an amount that would still put pressure on your monthly budget.

Before borrowing, know

01How much you are borrowing02The interest rate03Fees04Required payments05How long repayment may take

Remember this

Credit is future income brought forward.

Using it today creates a repayment obligation for later.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaLoans and lines of credit ↗Financial Consumer Agency of CanadaWhat to consider before borrowing money ↗
Screen 1 / 1